Correlation Between WiseChip Semiconductor and Nan Liu
Can any of the company-specific risk be diversified away by investing in both WiseChip Semiconductor and Nan Liu at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining WiseChip Semiconductor and Nan Liu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WiseChip Semiconductor and Nan Liu Enterprise, you can compare the effects of market volatilities on WiseChip Semiconductor and Nan Liu and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in WiseChip Semiconductor with a short position of Nan Liu. Check out your portfolio center. Please also check ongoing floating volatility patterns of WiseChip Semiconductor and Nan Liu.
Diversification Opportunities for WiseChip Semiconductor and Nan Liu
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WiseChip and Nan is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding WiseChip Semiconductor and Nan Liu Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nan Liu Enterprise and WiseChip Semiconductor is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on WiseChip Semiconductor are associated (or correlated) with Nan Liu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nan Liu Enterprise has no effect on the direction of WiseChip Semiconductor i.e., WiseChip Semiconductor and Nan Liu go up and down completely randomly.
Pair Corralation between WiseChip Semiconductor and Nan Liu
Assuming the 90 days trading horizon WiseChip Semiconductor is expected to generate 2.28 times more return on investment than Nan Liu. However, WiseChip Semiconductor is 2.28 times more volatile than Nan Liu Enterprise. It trades about 0.06 of its potential returns per unit of risk. Nan Liu Enterprise is currently generating about -0.09 per unit of risk. If you would invest 3,365 in WiseChip Semiconductor on September 13, 2024 and sell it today you would earn a total of 105.00 from holding WiseChip Semiconductor or generate 3.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WiseChip Semiconductor vs. Nan Liu Enterprise
Performance |
| Timeline |
| WiseChip Semiconductor |
| Nan Liu Enterprise |
WiseChip Semiconductor and Nan Liu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WiseChip Semiconductor and Nan Liu
The main advantage of trading using opposite WiseChip Semiconductor and Nan Liu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WiseChip Semiconductor position performs unexpectedly, Nan Liu can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Nan Liu will offset losses from the drop in Nan Liu's long position.| WiseChip Semiconductor vs. AU Optronics | WiseChip Semiconductor vs. Innolux Corp | WiseChip Semiconductor vs. Ruentex Development Co | WiseChip Semiconductor vs. Novatek Microelectronics Corp |
| Nan Liu vs. Makalot Industrial Co | Nan Liu vs. President Chain Store | Nan Liu vs. Ruentex Development Co | Nan Liu vs. Eclat Textile Co |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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